Japan says G8 stance is sign of approval for "Abenomics"

TOKYO (Reuters) - Japanese cabinet ministers welcomed the Group of Eight summit’s stance on Tokyo’s sweeping stimulus policies as a vote of confidence in the government’s strategy to end 15 years of entrenched deflation and revive a lacklustre economy.

British Prime Minister David Cameron (L) welcomes Japanese Prime Minister Shinzo Abe for the first plenary session of the G8 Summit at Lough Erne in Enniskillen, Northern Ireland June 17, 2013. REUTERS/Kevin Lamarque

Japan’s economics minister also moved to parry any suggestion that Prime Minister Shinzo Abe’s policies, known as “Abenomics”, are aimed at intentionally weakening the yen to benefit the country’s exports.

“Japan hasn’t been in the spotlight at a G8 meeting for quite some time,” Finance Minister Taro Aso said.

“More countries are starting to appreciate that our policies will contribute to the development of the global economy.”

In a statement which will form part of a final communiqué at a summit in Northern Ireland, the G8 leaders said Japan needed to address the challenge of defining a credible medium-term fiscal plan.

“Japan’s growth will be supported by its near-term fiscal stimulus, bold monetary policy and recently announced strategy for promoting private investment,” it said.

“However it will need to address the challenge of defining a credible medium-term fiscal plan.”

Japan’s debt burden is the worst in the world at more than twice the size of its $5 trillion economy. Successive governments have promised to do more to rein in spending and increase revenues, but little progress has been made over the years.

Abe’s government pushed through fiscal stimulus plans earlier this year. The spending is helping the economy but has added to the debt burden and reinforced the need for fiscal reform.

The BOJ in April launched an expanded quantitative easing campaign to reach 2 percent inflation in two years. Under the scheme, the BOJ’s monthly purchases of government debt are the equivalent of around 70 percent of newly issued government debt.

The yen has tumbled from late last year in anticipation of more aggressive monetary easing, prompting some countries to worry about competitive currency devaluations.

Economics Minister Akira Amari dismissed these concerns on Tuesday, saying many countries that worry about other trading partners deliberately weakening their currencies have benefited from the same approach.

(This story has been refiled to fix a typographical error in ninth paragraph)